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Old 11-18-2009, 01:33 PM   #1
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Default Advertising during slow times

I just got back from a meeting and during that meeting Bob asked me: "Do you fish when the fish aren't biting?". To me that is some pretty profound thinking. I asked him what the answer was and he said he didn't know.

Basically, he was asking if it is smart to increase advertising during periods that are historically slow. I've never heard this before (and if I did it didn't sink in). I've always learned that during the slow times, you advertise like crazy.

Now, Bob has got me re-thinking. For example, let's say over the past 5 years you have shown December to be your weakest month by far. You've talked to other painters, paint stores, etc... in your area and they are slow during this period as well.

Does it makes sense to increase advertising dollars when people are not looking to buy during this time? I don't think there is a right or wrong answer but was curious to y'alls thoughts? Thanks.
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Old 11-18-2009, 02:03 PM   #2
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I look at advertising in two ways. One is that it lets me get my piece of the pie (market). The more I advertise, the greater my share.

The second is evaluating the ROI on my dollars spent.

The problem is, number 1 and number 2 can be in opposition to each other. Its finding the point of diminishing return and staying under it.

I could advertise in January for exterior cleaning spending $2000 and land three jobs totalling $3000. Most guys would say that is good. It was better than sitting around and earning no money. The problem is in the numbers. My usual advertising expense is 5%. My salary and my company margins are based around that 5%. If I had to spend 66% on advertising like in the above example, none of my other expenses would be dramatically reduced. My employees would make money. My materials supplier would make money. My company and myself would make a goose egg.
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Old 11-18-2009, 02:04 PM   #3
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I don't agree with the notion that you have to increase advertising during slow times, BUT you have to at least maintain the same level of exposure.

Economic downturns don't last forever, and when it's over, the companies that had great exposure are on in the consumers' mind are the ones that will thrive one the economy rebounds.
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Old 11-18-2009, 02:55 PM   #4
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Let's say you average 5 leads per week for the year and your budget for advertising $100 per week for the year. On average you close on 2 of those 5 leads (40% close ratio). For conversation purposes, your avg job $1500.

In December (your still paying $100 / week to advertise) your lead avg / wk drops to 2. Your close ratio is still 40% (or .8 closes / wk).

So, now over the course of December you close on 3.2 jobs for a total of $4800 (3.2 x $1500) in total sales. The cost to obtain these sales is $400. That's 8.3% of total sales you've got invested in advertising.

Compared to your monthly average ($12,000 total sales, $400 advertising, 3.3% advertising to total sales).

One could argue it would make sense to decrease your advertising dollars.

I think PP hit it on the head when speaking about diminishing returns.

Appreciate the feedback.
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Old 11-18-2009, 04:07 PM   #5
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I like to think of it as advertising for the long haul, Im not out just trying to make a quick buck in the month of december, Im here to stay, and think of advertising in december as just helping name brand my company, the more you can get your name in their brains the more their gonna think of you when it comes time for painting. So they may not call you in december, but they may remeber you when they are ready for painting in july.

I usually enjoy the slower times in december and dont go overboard advertising, but I dont stop advertising either.

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Old 11-18-2009, 05:04 PM   #6
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Originally Posted by Dave Mac View Post
I like to think of it as advertising for the long haul, Im not out just trying to make a quick buck in the month of december, Im here to stay, and think of advertising in december as just helping name brand my company, the more you can get your name in their brains the more their gonna think of you when it comes time for painting. So they may not call you in december, but they may remeber you when they are ready for painting in july.

I usually enjoy the slower times in december and dont go overboard advertising, but I dont stop advertising either.
I completely agree with this. What are the chances that you are advertising to someone that needs painting done right now? You are advertising so that when they do need someone they remember your logo, name or anything and give you a chance to bid their work.

Which reminds me, every year the phone book guy tries to sell me some big special add where the idiot redoes my logo. My logo is on my cards, door hangers, van, shirt, website, and all other advertising for a reason recognition why in the hell does an advertising guy think its a good move to change it.
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Old 11-18-2009, 05:13 PM   #7
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There is so much name branding going on out there these days, unless you have millions upon millions of dollars - you won't be successful in name branding. If you think putting your ad in the months of December and January is going to give you a one up on the other contractors that wait til February, you are dead wrong. When it comes to newspaper advertizing - you only advertize for the months that you have a reasonable ROI like Ken Fenner said. If you have advertized for the last 7 years and hardly get any business during the months of December and January - don't be lame and chaulk it up to 'name' branding, it's just a plain waste of your advertizing budget.

Better yet, save the money and double on advertizing during the months when leads do come in. Thompson's water seal does 150 Million in gross revenue each year, and it costs them 35 Million in advertising to Name Brand themselves in order to get that money - do you see them advertising past Memorial Day?
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Old 11-18-2009, 05:28 PM   #8
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Quote:
Originally Posted by fresh coat View Post

I don't think there is a right or wrong answer but was curious to y'alls thoughts? Thanks.
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Old 11-18-2009, 05:28 PM   #9
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I am kinda leaning towards plain's point of view. However, I don't think you quit advertising all together but maybe scale back a bit on your known, proven slower months. That being said, I am still trying to figure out which is the best way to proceed for my company. And due to the varying opinions, this is exactly why I posted my conundrum on this forum. Thanks for the replies.
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Old 11-18-2009, 05:38 PM   #10
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One thing I would be concerned about in doubling my advertising in prime time season, is the ability to handle double the work, one of my major mistakes early in my buisness was taking on more work then I could handle. A lesson learned the hard way.
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Old 11-18-2009, 05:45 PM   #11
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Mac: Good point. We went through a similar type learning experience. My thought process was just throw more painters at it. I was wrong. In other words, an 80 hr job two pros can usually knock it out in a week. On the other hand, 6 pros would take ~100 hours to complete the same 80 hour job.
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Old 11-18-2009, 06:54 PM   #12
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Quote:
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One thing I would be concerned about in doubling my advertising in prime time season, is the ability to handle double the work, one of my major mistakes early in my buisness was taking on more work then I could handle. A lesson learned the hard way.
There is a very simple and easy fix for this. You have double the leads, raise your price so land the same amount of jobs. So if you had 10 leads normally for February and closed 7 jobs. But now doubling your marketing gives you 20 leads - just keep raising your price so you still only land 7 out of 20 jobs. Your gross profit margins will go through the roof and more than pay for the increase in advertizing.

I market for one reason and one reason only - because it gives me the ability to raise my price. How may you ask? Because when I was working in software my boss always told me to deal from a position of power. If you wanted a raise, make sure you had the upper hand before you started asking. Likewise with advertizing - if you double the amount of leads, you can afford to close at half your original closing percentages. Say you normally close 70% of your sales leads, if you double your leads through marketing, you can now close at 35% and have the same amount of jobs.

How much do you think you can raise your price before you lose twice as many leads, 10%, 20%, 30%? Who knows, but you will be able to raise your rates considerably.
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Old 11-18-2009, 07:28 PM   #13
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Plain: I think you are playin with fire. Yes - I understand supply and demand. But flexing your pricing is pretty dangerous stuff. I wish I could go into more detail but I can't. I really don't have a specific reason to support my "playin with fire" argument. To me, it just feels wrong.

I think it would be more benificial to keep you pricing "fairly" stable and put a plan into place for growth.

That being said, the method you speak of is a "tried and true" model.

Obviously, this is a very intiguing topic to me. Thanks.
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Old 11-18-2009, 07:36 PM   #14
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I can't agree with the idea of dramatically reducing marketing during slow periods. A large percentage of my leads come from marketing done months before. So if I reduce marketing in December, it will have an impact on my leads in February and March.

Lead generation isn't a switch that we can turn on and off. Certainly we can control the flow somewhat, but it isn't as easy as flipping a switch. I want steady leads, and to get that I must market steadily.

Having said that, I don't do direct mail during December as it can get lost in the junk mail too easily.

We talk a lot about marketing for winter work, but I don't see many talk about marketing for spring work. If we are marketing for winter work in August and September, why aren't we marketing for spring work in December and January? I try to start booking exteriors during the winter (we actually do exteriors every month, but I try to promote them during the winter).

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Old 11-18-2009, 07:53 PM   #15
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[quote=PressurePros;100306]I look at advertising in two ways. One is that it lets me get my piece of the pie (market). The more I advertise, the greater my share.

Just a general advertising question for you, Ken . . . Is it a fact that there is a pie and the best our advertising can do for us is get us a bigger piece of that pie, or is it possible for our advertising to affect the size of the pie?
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Old 11-18-2009, 08:03 PM   #16
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A large percentage of my leads come from marketing done months before. So if I reduce marketing in December, it will have an impact on my leads in February and March.

Lead generation isn't a switch that we can turn on and off. Certainly we can control the flow somewhat, but it isn't as easy as flipping a switch. I want steady leads, and to get that I must market steadily.

Brian Phillips


Thanks for so eloquently expressing my sentiments.
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Old 11-19-2009, 08:06 AM   #17
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I agree with Brian on this. A study shows that it takes 6 weeks for advertising to start working. If you stop with ads all together, you will loose out on future business.
We do trade shows all winter long, not for interior painting, but for exterior painting. I feel that advertising is the biggest investment a company can make in themselves.
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Old 11-19-2009, 10:04 AM   #18
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Quote:
Originally Posted by fresh coat View Post
Plain: I think you are playin with fire. Yes - I understand supply and demand. But flexing your pricing is pretty dangerous stuff. I wish I could go into more detail but I can't. I really don't have a specific reason to support my "playin with fire" argument. To me, it just feels wrong.

I think it would be more benificial to keep you pricing "fairly" stable and put a plan into place for growth.

That being said, the method you speak of is a "tried and true" model.

Obviously, this is a very intiguing topic to me. Thanks.
There is no fire at all - it's about the laws of supply and demand. If you think growth is hiring more guys, more trucks, more parking garages. Well it could be that - or that could put you under. The thing you have to remember is the cost of your revenue. If we both gross the same sales, but I charge double and my crew is half your size - I will take home much more profit. It's that simple.

When I sell my services, I am not just about price - but like all things price is a factor. Do you think you will lose 90% of your customers tomorrow if raise your price 10%? Another thing - once you get busy, you'll notice a lot of customers don't like to wait - you're booked out 3 months, guess what they will go with someone else. So what's the solution, hire another crew? So now it's like being booked 6 months with just one crew. But wait now you still have all the slow periods - are you just going to lay off now? I've got an idea - increase your marketing, keep your crew small, raise your price. There is a point of diminishing returns - and that will be something for you to figure out - but I have several friends in the trade that never consistently advertize and they price every job like they need it or they will go broke.
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Old 11-19-2009, 10:17 AM   #19
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[quote=GMack;100326]
Quote:
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I look at advertising in two ways. One is that it lets me get my piece of the pie (market). The more I advertise, the greater my share.

Just a general advertising question for you, Ken . . . Is it a fact that there is a pie and the best our advertising can do for us is get us a bigger piece of that pie, or is it possible for our advertising to affect the size of the pie?
That's an interesting question and without trying to sound like some self proclaimed expert.. it depends on the saturation of the market and what you are advertising.

My case in point.. roof cleaning. Its new to many people. I just started offering it. There is not much competition but the one company that does do it advertises often on cable. Everytime they do, my phone blows up with calls for roof cleaning (not sure why). So, yes, they are growing the pie.
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Old 11-19-2009, 07:12 PM   #20
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There is so much name branding going on out there these days, unless you have millions upon millions of dollars - you won't be successful in name branding. If you think putting your ad in the months of December and January is going to give you a one up on the other contractors that wait til February, you are dead wrong. When it comes to newspaper advertizing - you only advertize for the months that you have a reasonable ROI like Ken Fenner said. If you have advertized for the last 7 years and hardly get any business during the months of December and January - don't be lame and chaulk it up to 'name' branding, it's just a plain waste of your advertizing budget.

Better yet, save the money and double on advertizing during the months when leads do come in. Thompson's water seal does 150 Million in gross revenue each year, and it costs them 35 Million in advertising to Name Brand themselves in order to get that money - do you see them advertising past Memorial Day?

Where do you think we are trying to do our "name branding" across the whole country. I want the people in Frankfort, KY and hopefully the surrounding areas to say when they are getting some painting done that they will call Capital City and get a bid. I dont think I need millions to do that. I think Ive got a good name, logo, and reputation but I need to keep on pushing my name in front of them. Besides all of that phone books,
billboards, and many other forms of advertising is a year round thing. I dont plan on buying tv commercials during the winter months but I will probably have more time in January then any other time of the year to hand out door hangers
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